Climate change, catastrophic risk and disaster law

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Rosemary Lyster does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

On 28 March the Intergovernmental Panel on Climate Change (IPCC) released its full report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation (SREX).

The IPCC’s essential message is that the evidence suggests in the last half century, climate change has led to changes in climate extremes such as heat waves, record high temperatures and, in many regions, heavy precipitation. These - in combination with social vulnerabilities and exposure to risks - can produce climate-related disasters. Climate extremes are disasters where they produce widespread damage and cause severe alterations in the normal functioning of communities and societies.

As NSW mops up after the floods and braces for more wet weather, it is timely that we ask ourselves if the law is equipped to deal with catastrophic climate risks.

In 2011, the Australian Climate Change Commission said that the catastrophic 2010-2011 floods across eastern Australia were caused by a very strong La Niña event rather than climate change. The Commission concluded, however, that a link between the floods and climate change is plausible even if not yet discernible.

From a risk perspective, it suggested factoring climate change-induced flooding into urban and regional planning, the design of flood mitigation works, and reviews of emergency management procedures.

More recent research suggests it would be naïve to think the 2012 floods that inundated NSW and Queensland are not driven in part by human-induced climate change.

Floods are only one type of possible climate disasters facing Australia. The others are bushfires, sea-level rise and food and water security.

In the United States, Disaster Law has developed rapidly in response to disasters such as Hurricane Katrina and 9/11. These made it clear that the law is woefully unprepared to handle disasters, although it plays a critical role in preventing disasters and managing and responding to them.

Is this the time for a comprehensive and integrated body of disaster law to emerge in Australia rather than continuing to think that disaster laws are all about emergency responses?

Two areas of law are particularly relevant when it comes to catastrophic climate risks - environmental planning and assessment law, and insurance law. The 2010 Final Report of the 2009 Victorian Bushfires Royal Commission, for example, proposes changing Victoria’s planning regime to reconsider siting homes in areas of high bushfire risk, clearing native vegetation and protecting biodiversity.

But the real question that needs to be answered is whether we can go on simply tweaking and upgrading our legislation or whether we need wholesale reform as we confront catastrophes never before envisaged.

It seems that environmental planning and assessment law has endured decades of reform, whilst always maintaining the essential stability of the system. For example, to respond to the challenge of sea level rise, the then NSW government released the 2009 NSW Sea Level Rise Policy Statement. It states that “[t]he sea level rise planning benchmarks are not intended to be used as a blanket prohibition on development of land projected to be affected by sea level rise”. Is this an adequate response?

The Australian government’s report, Climate Change Risks to Australia’s Coast claims that a sea level rise of 1.1 metres, and possibly of several metres within the next few centuries, is plausible for the purposes of risk assessment. This means up to $63 billion of existing residential buildings are potentially at risk of inundation. Australia’s infrastructure concentrated in the coastal zone is also at risk.

We really need to begin planning on a multi-decadal basis specifically with the risk of climate catastrophes in mind.

We also need to be clear about who should bear the financial risk of these catastrophes - government, the public or the insurance industry? In 2010, global re-insurers faced costs of $28 billion following floods and hailstorms in Australia and earthquakes in New Zealand. The Insurance Australia Group confirmed that it has recently increased it catastrophic reinsurance from $4.1 billion to $4.7 billion, which includes cover for blanket flood insurance.

The 2010-2011 floods in Queensland resulted in three-quarters of the state being declared a disaster zone. At least 28,000 homes have to be rebuilt. This alone is likely to cost $8 billion, with the total rebuilding costs amounting to $20 billion or 1.5% of GDP. The government shared this risk with the public by establishing the Queensland Flood Levy and establishing the Natural Disaster Insurance Review, which released its report in September 2011. What will be the costs of the 2012 floods?

Meanwhile questions are already being asked about whether insurance law can respond effectively to climate disasters, or whether catastrophic risks are simply uninsurable?

These issues are front and centre of what policy and law-makers at every level of government should be considering. A team of legal academics at Sydney Law School has begun to work on developing an integrated climate disaster law and is doing so with the collaboration of one of world’s leading disaster lawyers at Berkeley University. They hope that by comparing their various experiences and legal frameworks they will contribute to the development of a body of disaster law to deal with catastrophic climate risks in Australia.